Supreme Court Judge Burke decision is the appearance of misconceptions of law

October 29, 2015 § Leave a comment

I could write all day and not put better words to how Social Security cannot be used in divorc cases than Kluck v. Kluck. Here is the link: Nothing on 407(B)

[¶30] The trial court included among the marital assets, and credited Marcia for part of her share of the marital property, a $10,659.00 lump-sum social security disability payment Marcia received in 1995 and soon spent. Marcia contends counting this amount as marital property violated the anti-alienation section of the Social Security Act:
The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.
42 U.S.C. 407(a). In Olson v. Olson, 445 N.W.2d 1, 5-11 (N.D. 1989), we extensively addressed the effect of this federal law on the property division in a divorce case:
Although marital property is generally under state control, it is clear to us that Congress wants social security to be exclusively federally controlled. Congress preempted state divorce laws when it enacted its own scheme of social security benefits for divorced spouses. The anti-assignment and anti-legal-process provisions in the Social Security Act, with their specific allowance for spousal support, also promote federal uniformity and preempt state law.
We conclude that social security cannot be distributed or used as an offset in division of marital property. To do so would conflict with the federal plan and would violate the Supremacy Clause of the United States Constitution. Any change in the allocation of social security at divorce must come from Congress. Therefore, we affirm the trial court’s ruling that “[s] ocial security benefits of either party shall not be considered in this matter.”
Olson, 445 N.W.2d at 11 (footnote omitted). Compare Vitko v. Vitko, 524 N.W.2d 102, 104 (N.D. 1994) (trial court did not err in excluding military disability benefits and social security benefits from the equitable property division, while considering the disability income “so as to determine the financial circumstances of each party to the divorce”). We thus concluded in Olson that federal law prohibits counting social security benefits as marital property.
[¶31] Roger asserts Olson should be distinguished because it dealt with future benefits, while here the trial court held that benefits already received by Marcia were marital property. Roger argues:
As the Court in Olson pointed out, it is the future expectancy of receiving Social Security which cannot be transferred, assigned, or attached. It is the future benefits of Social Security which cannot be considered.
However, once a benefit is received in the form of cash it is no longer a future benefit. As cash money it is no different than any other money which might be in the bank as a savings or checking account. Having received the lump sum distribution the payment was transformed into an asset which the Court could properly consider for the division of property.
However, 42 U.S.C. 407(a) expressly shelters “moneys paid or payable” for the recipient alone. Any doubt about this was resolved by the United States Supreme Court in Philpott v. Essex County Welfare Board, 409 U.S. 413 (1973). In Philpott, a county welfare board sought reimbursement from a welfare recipient and attempted to reach a lump-sum social security disability payment that the welfare recipient had received and held in a bank account. The Supreme Court concluded 42 U.S.C. 407(a) barred reaching the funds in the account:
On its face, the Social Security Act in § 407 bars the State of New Jersey from reaching the federal disability payments paid to Wilkes. The language is all-inclusive: “[N] one of the moneys paid or payable . . . under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process . . . .” The moneys paid as retroactive benefits were “moneys paid . . . under this subchapter”; and the suit brought was an attempt to subject the money to “levy, attachment . . . or other legal process.”
Philpott, 409 U.S. at 415-416 (footnote omitted). The Court explained that “[t] he protection afforded by § 407 is to ‘moneys paid,'” and “the funds on deposit were readily withdrawable and retained the quality of ‘moneys’ within the purview of § 407.” Philpott, 409 U.S. at 416. The Court concluded that § 407 “imposes a broad bar against the use of any legal process to reach all social security benefits.” Philpott, 409 U.S. at 416-417; seealso Bennett v. Arkansas, 485 U.S. 395, 397-398 (1988). Thus, identifiable social security moneys in the hands of a divorcing spouse cannot be counted as marital assets to calculate divisions.
[¶32] Many other courts have agreed, concluding that 42 U.S.C. 407(a) protects identifiable social security benefits previously paid, as well as future benefits. See, as examples, Guidry v. Sheet Metal Workers National Pension Fund, 39 F.3d 1078, 1083 (10th Cir. 1994); In re Marriage of Knipp, 15 Kan.App.2d 494, 809 P.2d 562, 563-564 (1991); Hatfield v. Cristopher, 841 S.W.2d 761, 767 (Mo.Ct.App. 1992); Boulter v. Boulter, 930 P.2d 112, 115 (Nev. 1997). The trial court’s findings that Marcia’s social security funds were marital property and that those funds must be counted for Marcia as part of the marital estate were induced by an erroneous view of the law and are clearly erroneous.


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